Chapter 1 Review (Life): Basic Principles

Question 1

What is the name of the law that requires insurers to disclose information gathering practices and where the information was obtained?

Answer 1

Fair Credit Reporting Act

Question 2

The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called:

Answer 2

reserves

Question 3

A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as:

Answer 3

fraternal benefit society

Question 4

A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a:

Answer 4

Risk retention group

Question 5

What year was the McCarran-Ferguson Act enacted?

Answer 5

1945

Question 6

Dividends payable to a policyowner are

Answer 6

declared by the insurance company

Question 7

What type of reinsurance contract involves two companies automatically sharing their risk exposure?

Answer 7

Treaty